Overview
This lecture covers the first 30-hour Michigan Residential Builder Course (Builder 1), focusing on licensing, laws, business practices, estimating, contracts, project management, and marketing necessary for the state exam.
Course Structure & Requirements
- Builder 1 includes five chapters, each requiring about six hours (total 30 hours/1800 minutes) of study.
- A second 30-hour segment (Builder 2) is also required.
- Course includes quizzes and review questions; final quiz requires a 70% pass.
- A timer tracks required course time.
- Necessary application steps: Complete 60 hours, create an Accela account at michigan.gov/builders, and apply for the state exam.
Licensing Laws & Statutory Requirements
- Builders must be licensed under the Michigan Occupational Code Article 24.
- Residential builder's license is required for any construction, repair, or alteration of residential property.
- Maintenance & Alteration (M&A) license allows a contractor to perform only one trade at a time.
- Exemptions: Owner-building for personal use, certain government reps, labor-only providers, projects under $600, and trades operating within their specific licenses.
Regulatory Bodies & Enforcement
- The Department of Licensing and Regulatory Affairs (LARA) is referred to as "the department."
- The Residential Builders Board consists of nine members: four builders, two M&A contractors, three public representatives.
- Board duties: Advising the department, interpreting licensing, investigating, and assessing penalties.
- Licensing can be held by individuals or business entities; non-residents must file consent to service and maintain a business office in Michigan.
Business Practices & Compliance
- Advertising must include the exact business name, license number, and business address.
- All contracts and change orders must be in writing, and copies provided immediately.
- Builders are required to maintain accurate financial records and may be asked for financial statements.
- Violations include abandonment, conversion of funds, failure to follow plans/specs, and aiding unlicensed work.
Complaints, Penalties & Arbitration
- Consumers have 18 months to file complaints.
- The state investigates with help from local building inspectors.
- Arbitration clauses can prevent state action if disputes are resolved within 90 days.
- Penalties for violations include fines, license limitations, suspension/revocation, restitution, and potential criminal charges for unlicensed activity or fund diversion.
Construction Lien Law
- Key documents: Notice of Commencement, Notice of Furnishing, Sworn Statement, Waiver of Lien, Claim of Lien, Discharge of Lien.
- Liens must be filed within 90 days of job completion; foreclosure action within one year.
- Subcontractors, suppliers, and laborers must provide notice to protect their lien rights.
- Title companies can assist with documents and lien searches.
Real Estate, Zoning & Environmental Regulations
- Legal descriptions and surveys are critical before construction.
- Zoning variances and grandfather clauses can affect property use.
- Fair Housing Laws prohibit discrimination by race, color, religion, national origin, sex, disability, familial status, age, marital status, height, and weight.
- Environmental laws: Asbestos and lead paint regulations, wetland protections, and radon awareness.
Estimating & Job Costing
- Types of estimates: Conceptual (ballpark), preliminary, and detailed.
- Influencing factors: Project size, complexity, location, season, and material/labor costs.
- Direct costs (project-specific) and indirect costs (overhead) must be distinguished.
- Job costing involves detailed takeoffs, labor, materials, permits, and overhead.
Contracts & Risk Management
- Contracts must be in writing, include complete specs/plans, and detail payment mechanisms.
- Lump sum, cost-plus, fixed-fee, and guaranteed maximum price contracts are common.
- Indemnification, liquidated damages, and force majeure clauses manage risk.
Project Management & Scheduling
- Project managers oversee costs, time, quality, and safety.
- Bar charts help visualize project timelines and task overlaps.
- Cost monitoring is essential to ensure profits and avoid overruns.
Marketing & Sales
- Builders should identify their niche and analyze competitors.
- Distinguishing factors include specialization, reliability, and quality.
- Effective marketing uses referrals, advertising, websites, and professional sales presentations.
- Salespeople must be licensed and well-trained; customer follow-up is essential for repeat business.
Key Terms & Definitions
- Accela Account — Online portal for license applications and renewals.
- Lien — Legal claim on property for unpaid work/materials.
- Notice of Commencement — Document posted before work, listing owner and job details.
- Notice of Furnishing — Notice by subcontractors/suppliers to assert lien rights.
- Sworn Statement — Itemized list of all parties owed money on a project.
- Waiver of Lien — Document relinquishing lien rights upon payment.
- Change Order — Written amendment to original contract/specs.
- Guaranteed Maximum Price — Contract type capping total project cost.
- Liquidated Damages — Predefined contract penalty for late completion.
- Force Majeure — Contract clause protecting against uncontrollable events.
Action Items / Next Steps
- Read the provided PDF textbook thoroughly.
- Complete all quizzes and review questions.
- Ensure 1800 minutes of logged study time.
- Establish your Accela account (michigan.gov/builders) after both courses.
- Prepare for the state licensing exam after finishing Builder 1 and Builder 2.